Scandal in Brazil, The Petrobras affair

“IF I talk, there won’t be an election,” Paulo Roberto Costa, a former executive at Petrobras, was supposed to have warned. Now Mr Costa (pictured), arrested in March in a money-laundering probe involving Brazil’s state-controlled oil giant, has started talking. Polling day in Brazil, now less than a month away, will not be cancelled. But if what he says is true, it could affect the outcome.

According to revelations published in Veja, a leading weekly, and Estado de São Paulo, a newspaper, Mr Costa, who ran Petrobras’s refining division from 2004 to 2012, has accused more than 40 politicians of involvement in a vast kickback scheme. The list reportedly includes a minister, three state governors, six senators and dozens of congressmen from President Dilma Rousseff’s Workers’ Party (PT) and several coalition allies. The beneficiaries are alleged to have pocketed 3% of the value of contracts signed with Petrobras in return for supporting the government in congressional votes.

The federal police, who have been taking Mr Costa’s testimony since August 29th, have yet to confirm or deny the press reports. All those who could be contacted have fiercely denied the allegations; at the time of writing The Economist is awaiting a statement from Petrobras, as well as from the police and the government.

Aécio Neves, leader of the opposition Party of Brazilian Social Democracy (PSDB) and a rival of Ms Rousseff’s for the presidency, was quick to dub the scandal “mensalão 2”. In the original mensalão (“big monthly stipend”), a scheme that operated from 2003 until it came to light in 2005, the PT paid a monthly bribe to congressional allies in exchange for their votes. The scandal hurt the government of Luiz Inácio Lula da Silva, Ms Rousseff’s predecessor and political patron, and landed some of the PT’s leading lights behind bars.

Lula himself emerged from that imbroglio personally untarnished and managed to win re-election in the following year. But it is widely thought to have cost him an outright victory in the first round. Ms Rousseff may not be so lucky. Lula had a year to shake off the stench, whereas this time the incumbent has only a month till polling day. She is already facing a tough challenge from Marina Silva, a popular former environment minister who has been surging in opinion polls since the death in a plane crash three weeks ago of Eduardo Campos, leader and candidate of the Brazilian Socialist Party (PSB), pushed her to the top of the ticket.

Ms Silva might have been in an even better position had Mr Costa not also fingered the late Mr Campos, a former PT ally and governor of Pernambuco when Petrobras decided to build a huge refinery in the state. (The unscathed Mr Neves looks too far behind his two rivals for it to matter much.) But Ms Silva is regarded by most Brazilians as ethical to a fault; besides Mr Campos, who cannot defend himself, no PSB-linked politician apparently appears on Mr Costa’s list.

No one doubts Ms Rousseff’s personal probity. And Mr Costa’s word, made in return for a reduced prison term, will need to be carefully corroborated. But the affair is bound to rekindle memories of PT sleaze that the president has been trying hard to put behind her. It does not help the president that if true, the alleged shenanigans at Petrobras would have taken place right under her nose, first as Lula’s energy minister, then as the president of the company’s administrative council. The campaign, already reset once by Mr Campos’s tragic demise, has been jolted again.